Although stem cell transplantation after ischemic stroke has been extensively tested as a possible therapy in adult animals, little research has been done to evaluate stem cell transplantation in neonates. Among the different types of stem cells, bone marrow mesenchymal stem cells (BMSCs) are unique in their potential for multipotentcy and their autograft capability. BMSCs are capable of passing through the blood brain barrer and homing to the ischemic region. The low survival rate of transplanted BMSCs, or stem cells in general, however, has significantly hampered their effectiveness and application in stroke therapy. Making use of our unique barrel cortex ischemic stroke model in the neonate, we will pursue novel approaches to improve both the viability and regenerative capacity of BMSCs. Specific Aim 1 will test the hypothesis that transplantation of BMSCs pre-treated with hypoxic preconditioning (HP) will result in significantly greater functional benefits in the repair of the ischemia- damaged cortex than non-treated BMSCs. Further improvement of functional benefits will be achieved through an enriched environment of target specific physical therapy following BMSC transplantation. Specific Aim 2 will examine the hypothesis that HP-pretreatment of BMSCs significantly enhances their survival after transplantation into the neonatal ischemic brain. The extent of cell death and neural differentiation of BMSCs that home to the ischemic cortex will be compared at 1 to 30 days after transplantation. Specific Aim 3 will examine the effect of transplanted BMSCs on angiogenesis in the post-ischemic brain. We will specifically test the novel hypothesis that HP-increased VEGF expression in BMSCs is a potent stimulator of endogenous angiogenesis, neurogenesis and therefore is effective in the treatment of ischemic stroke. Recovery of local cerebral blood flow (LCBF) and barrel functions after BMSC treatment will be correlated with both angiogenesis and morphological changes. We expect that this novel therapeutic intervention combining 1) administation of HP-BMSCs with 2) an enriched environment, will result in synergistic beneficial effects; if so, this strategy will likely improve the efficacy and efficiency of BMSC transplantation therapy in the treatment of stroke in adults as well as in neonates.